Heizer om10 ch03

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  • 1. 10/16/2010 Project Management Outline 3 Global Company Profile: Bechtel Group The Importance of Project PowerPoint presentation to accompany Management Heizer and Render Operations Management, 10e Project Planning Principles of Operations Management, 8e PowerPoint slides by Jeff Heyl The Project Manager Work Breakdown Structure Project Scheduling© 2011 Pearson Education, Inc. publishing as Prentice Hall 3-1 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3-2 Outline - Continued Outline - Continued Project Controlling Determining the Project Schedule Project Management Techniques: Forward Pass PERT and CPM Backward Pass The Framework of PERT and CPM Calculating Slack Time and Identifying the Critical Path(s) Network Diagrams and Approaches Activity-on-Node Example Variability in Activity Times Activity-on-Arrow Example Three Time Estimates in PERT Probability of Project Completion© 2011 Pearson Education, Inc. publishing as Prentice Hall 3-3 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3-4 Outline - Continued Learning Objectives Cost-Time Trade-Offs and Project When you complete this chapter you Crashing should be able to: A Critique of PERT and CPM 1. Use a Gantt chart for scheduling Using Microsoft Project to Manage 2. Draw AOA and AON networks 2 D d t k Projects 3. Complete forward and backward passes for a project 4. Determine a critical path© 2011 Pearson Education, Inc. publishing as Prentice Hall 3-5 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3-6 1
  • 2. 10/16/2010 Learning Objectives Bechtel Projects When you complete this chapter you Building 26 massive distribution centers in just two years for the internet company Webvan should be able to: Group ($1 billion) 5. Calculate the variance of Constructing 30 high-security data centers activity times worldwide for Equinix, Inc. ($1.2 billion) Building and running a rail line between London 6. Crash a project and the Channel Tunnel ($4.6 billion) Developing an oil pipeline from the Caspian Sea region to Russia ($850 million) Expanding the Dubai Airport in the UAE ($600 million), and the Miami Airport in Florida ($2 billion)© 2011 Pearson Education, Inc. publishing as Prentice Hall 3-7 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3-8 Bechtel Projects Strategic Importance of Project Management Building liquid natural gas plants in Yemen $2 billion) and in Trinidad, West Indies ($1 billion) Bechtel Project Management: Building a new subway for Athens, Greece ($2.6 Iraq war aftermath billion) International workforce, construction Constructing a natural gas pipeline in Thailand professionals, cooks, medical personnel, ($700 million) security Building 30 plants for iMotors.com, a company Millions of tons of supplies that sells refurbished autos online ($300 million) Hard Rock Cafe Rockfest Project: Building a highway to link the north and south of 100,000 + fans Croatia ($303 million) planning began 9 months in advance© 2011 Pearson Education, Inc. publishing as Prentice Hall 3-9 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 10 Project Characteristics Examples of Projects Single unit Building Construction Many related activities Difficult production planning and inventory control General purpose equipment High labor skills Research Project© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 11 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 12 2
  • 3. 10/16/2010 Management of Projects Project Management Activities 1. Planning - goal setting, defining the Planning project, team organization Objectives Scheduling Project activities 2. Scheduling - relates people, money, Resources Start & end times and supplies to specific activities pp p Work break-down structure Network N t k and activities to each other Organization 3. Controlling - monitors resources, costs, quality, and budgets; revises plans and shifts resources to meet time and cost demands Controlling Monitor, compare, revise, action© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 13 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 14 Project Planning, Project Planning, Scheduling, and Controlling Scheduling, and Controlling Figure 3.1 Figure 3.1 Before Start of project During Before Start of project During project Timeline project project Timeline project© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 15 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 16 Project Planning, Project Planning, Scheduling, and Controlling Scheduling, and Controlling Figure 3.1 Figure 3.1 Before Start of project During Before Start of project During project Timeline project project Timeline project© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 17 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 18 3
  • 4. 10/16/2010 Project Time/cost estimates Planning, Budgets Project Planning Scheduling, and Controlling Engineering diagrams Cash flow charts Material availability details Establishing objectives Defining project Budgets Delayed activities report Creating work Slack activities report breakdown structure b kd t t Determining CPM/PERT resources Gantt charts Milestone charts Forming organization Cash flow schedules Figure 3.1 Before Start of project During project Timeline project© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 19 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 20 Project Organization Project Organization Works Best When Often temporary structure 1. Work can be defined with a specific goal and deadline Uses specialists from entire company 2. The job is unique or somewhat Headed by project manager unfamiliar to the existing organization Coordinates activities C di t ti iti 3. The work contains complex Monitors schedule interrelated tasks requiring specialized and costs skills Permanent 4. The project is temporary but critical to structure called the organization ‘matrix organization’ 5. The project cuts across organizational lines© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 21 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 22 A Sample Project Matrix Organization Organization Marketing Operations Engineering Finance President Project 1 Human Quality Resources Marketing Finance Design Production Mgt Project P j t2 Project 1 Project Manager Mechanical Test Technician Engineer Engineer Project 3 Project 2 Project Manager Electrical Computer Project 4 Engineer Engineer Technician Figure 3.2© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 23 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 24 4
  • 5. 10/16/2010 The Role of The Role of the Project Manager the Project Manager Highly visible Highly visible Responsible for making sure that: Responsible for making sure that: should be: Project managers 1. All necessary activities are finished in order Good coaches 1. All necessary activities are finished in order and on time and on time Good communicators 2. The project comes in within budget 2. The project comesAble to organize activities in within budget 3. The project meets quality goals 3. The project meets from a variety of disciplines quality goals 4. The people assigned to the project receive 4. The people assigned to the project receive motivation, direction, and information motivation, direction, and information© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 25 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 26 Ethical Issues Work Breakdown Structure Project managers face many ethical decisions on a daily basis Level The Project Management Institute has established an ethical code to deal with 1. Project problems such as: 2. 2 Major tasks in the project 1. Offers of gifts from contractors 3. Subtasks in the major tasks 2. Pressure to alter status reports to mask delays 4. Activities (or work packages) 3. False reports for charges of time and expenses to be completed 4. Pressure to compromise quality to meet schedules© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 27 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 28 Work Breakdown Structure Project Scheduling Develop Windows 7 Level 1 1.0 Operating System Identifying precedence Level 2 Software Design 1.1 Project Management 1.2 System Testing 1.3 relationships Level 3 Develop 1.1.1 Planning 1.2.1 Module 1.3.1 Sequencing activities GUIs Testing Determining activity Ensure Compatibility with Earlier Versions 1.1.2 Cost/Schedule Management 1.2.2 Defect Testing 1.3.2 times & costs Level 4 Compatible with 1.1.2.1 Estimating material &(Work packages) Windows ME worker requirements Compatible with Windows Vista 1.1.2.2 Determining critical activities Compatible with Figure 3.3 Windows XP 1.1.2.3© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 29 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 30 5
  • 6. 10/16/2010 Purposes of Project Scheduling Techniques Scheduling 1. Shows the relationship of each activity to 1. Ensure that all activities are planned others and to the whole project for 2. Identifies the precedence relationships 2. Their order of performance is among activities accounted for 3. Encourages the setting of realistic time 3. The activity time estimates are and cost estimates for each activity recorded 4. Helps make better use of people, money, 4. The overall project time is developed and material resources by identifying critical bottlenecks in the project© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 31 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 32 Project Management A Simple Gantt Chart Techniques Gantt chart Time J F M A M J J A S Critical Path Method (CPM) Design es g Prototype Program Evaluation Test and Review Technique (PERT) Revise Production© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 33 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 34 Service For a Delta Jet Project Control Reports Deplaning Passengers Baggage Baggage claim Detailed cost breakdowns for each task Container offload Fueling Pumping Engine injection water Total program labor curves Cargo and mail Container offload Galley servicing Main cabin door Cost distribution tables Aft cabin door Lavatory servicing Drinking water Aft, center, forward Aft center for ard Loading Functional cost and hour summaries Cabin cleaning First-class section Economy section Raw materials and expenditure forecasts Cargo and mail Container/bulk loading Flight services Galley/cabin check Variance reports Receive passengers Operating crew Baggage Aircraft check Loading Time analysis reports Passengers Boarding 0 10 20 30 40 Work status reports Time, Minutes Figure 3.4© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 35 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 36 6
  • 7. 10/16/2010 PERT and CPM Six Steps PERT & CPM Network techniques 1. Define the project and prepare the Developed in 1950’s work breakdown structure CPM by DuPont for chemical plants (1957) 2. Develop relationships among the PERT by Booz, Allen & Hamilton with the Booz U.S. Navy, for Polaris missile (1958) activities - d id which activities ti iti decide hi h ti iti must precede and which must Consider precedence relationships and interdependencies follow others Each uses a different estimate of 3. Draw the network connecting all of activity times the activities© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 37 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 38 Six Steps PERT & CPM Questions PERT & CPM Can Answer 4. Assign time and/or cost estimates to each activity 1. When will the entire project be completed? 5. Compute the longest time path through the network – thi is called th h th t k this i ll d 2. 2 What are the critical activities or tasks in the project? the critical path 3. Which are the noncritical activities? 6. Use the network to help plan, 4. What is the probability the project will be schedule, monitor, and control the completed by a specific date? project© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 39 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 40 Questions PERT & CPM A Comparison of AON and Can Answer AOA Network Conventions Activity on Activity Activity on 5. Is the project on schedule, behind Node (AON) Meaning Arrow (AOA) schedule, or ahead of schedule? A comes before 6. Is the money spent equal to, less than, or y p q (a) A B C B, which comes greater than the budget? before C. b f C A B C A A 7. Are there enough resources available to A and B must both finish the project on time? (b) C be completed before C can start. C B B 8. If the project must be finished in a shorter B time, what is the way to accomplish this B and C cannot at least cost? (c) A begin until A is B completed. A C C© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 41 © 2011 Pearson Education, Inc. publishing as Prentice Hall Figure 3.5 3 - 42 7
  • 8. 10/16/2010 A Comparison of AON and A Comparison of AON and AOA Network Conventions AOA Network Conventions Activity on Activity Activity on Activity on Activity Activity on Node (AON) Meaning Arrow (AOA) Node (AON) Meaning Arrow (AOA) C and D cannot A C begin until both g A C B and C cannot begin until A is (d) A and B are completed. D B D completed. A B D cannot begin A B D B D until both B and (f) C are completed. Dummy C cannot begin A dummy C C activity until both A and B activity is again A C are completed; D A C introduced in (e) cannot begin until Dummy activity AOA. B is completed. A B D dummy activity is introduced in AOA. B D© 2011 Pearson Education, Inc. publishing as Prentice Hall Figure 3.5 3 - 43 © 2011 Pearson Education, Inc. publishing as Prentice Hall Figure 3.5 3 - 44 AON Example AON Network for Milwaukee Paper Manufacturings Milwaukee Paper Activities and Predecessors Immediate Activity Description Predecessors A Build internal components — Activity A A B Modify roof and floor y — (Build Internal Components) C Construct collection stack A D Pour concrete and install frame A, B Start E Build high-temperature burner C F Install pollution control system C Activity B Start B G Install air pollution device D, E (Modify Roof and Floor) Activity H Inspect and test F, G Table 3.1 Figure 3.6© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 45 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 46 AON Network for AON Network for Milwaukee Paper Milwaukee Paper Activity A Precedes Activity C F A C A C E Start Start H B D B D G Activities A and B Arrows Show Precedence Precede Activity D Figure 3.7 Relationships Figure 3.8© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 47 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 48 8
  • 9. 10/16/2010 AOA Network for Determining the Project Milwaukee Paper Schedule Perform a Critical Path Analysis C 2 4 (Construct The critical path is the longest path Stack) through the network The critical path is the shortest time in 1 Dummy 6 H 7 which the project can be completed Activity (Inspect/ Test) Any delay in critical path activities delays the project 3 D 5 Critical path activities have no slack (Pour Concrete/ time Install Frame) Figure 3.9© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 49 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 50 Determining the Project Determining the Project Schedule Schedule Perform a Critical Path Analysis Perform a Critical Path Analysis Activity Description Time (weeks) Earliest start (ES) = earliest time at which an activity can A Build internal components 2 Activity Description assuming all predecessors(weeks) start, Time have B Modify roof and floor 3 A Build internal components p been completed 2 C Construct collection stack 2 EarliestB Modify roof and floor 3 finish (EF) = earliest time at which an activity can D Pour concrete and install frame 4 C be finished Construct collection stack 2 E Build high-temperature burner 4 Latest start (LS) =concrete and install frame D Pour latest time at which an activity can 4 F Install pollution control system 3 E Build high-temperature delay the completion start so as to not burner 4 G Install air pollution device 5 F Install time of the entire project pollution control system 3 H Inspect and test 2 Latest finish (LF) = latest time bydevice an activity has to G Install air pollution which 5 be finished so as to not delay the Total Time (weeks) 25 H Inspect and test 2 completion time of the entire project Total Time (weeks) 25 Table 3.2 Table 3.2© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 51 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 52 Determining the Project Forward Pass Schedule Begin at starting event and work forward Perform a Critical Path Analysis Activity Name Earliest Start Time Rule: or Symbol If an activity has only a single immediate A Earliest predecessor, its ES equals the EF of the d it l th f th Earliest ES EF Finish predecessor Start If an activity has multiple immediate predecessors, its ES is the maximum of Latest LS LF Latest all the EF values of its predecessors Start 2 Finish ES = Max {EF of all immediate predecessors} Figure 3.10 Activity Duration© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 53 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 54 9
  • 10. 10/16/2010 Forward Pass ES/EF Network for Milwaukee Paper Begin at starting event and work forward Earliest Finish Time Rule: ES EF = ES + Activity time The earliest finish time (EF) of an activity Start is th i the sum of its earliest start ti f it li t t t time (ES) 0 0 and its activity time 0 EF = ES + Activity time© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 55 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 56 ES/EF Network for ES/EF Network for Milwaukee Paper Milwaukee Paper EF of A = A ES ES of A + 2 0 2 of A A 2 EF of B = 0 2 ES ES of B + 3 0 Start 0 0 Start 0 of B B 0 0 0 3 2 3© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 57 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 58 ES/EF Network for ES/EF Network for Milwaukee Paper Milwaukee Paper A C A C 0 2 2 4 0 2 2 4 2 2 2 2 Start Start 0 0 0 0 = Max (2, 3) D 0 0 3 7 B B 0 3 0 3 3 3 4© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 59 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 60 10
  • 11. 10/16/2010 ES/EF Network for ES/EF Network for Milwaukee Paper Milwaukee Paper A C A C F 0 2 2 4 0 2 2 4 4 7 2 2 2 2 3 Start Start E H 0 0 0 0 4 8 13 15 0 0 4 2 B D B D G 0 3 3 7 0 3 3 7 8 13 3 4 3 4 5 Figure 3.11© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 61 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 62 Backward Pass Backward Pass Begin with the last event and work backwards Begin with the last event and work backwards Latest Finish Time Rule: Latest Start Time Rule: If an activity is an immediate predecessor The latest start time (LS) of an activity is for just f j t a single activity, its LF equals the i l ti it it l th the diff th difference of it l t t finish time (LF) f its latest fi i h ti LS of the activity that immediately follows it and its activity time If an activity is an immediate predecessor to more than one activity, its LF is the minimum of all LS values of all activities LS = LF – Activity time that immediately follow it LF = Min {LS of all immediate following activities}© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 63 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 64 LS/LF Times for LS/LF Times for Milwaukee Paper Milwaukee Paper A C F A C F 0 2 2 4 4 7 0 2 2 4 4 7 10 13 2 2 3 2 2 3 Start E H Start E H 0 0 0 0 4 8 13 15 LF = Min(LS of 4 8 13 15 13 15 following activity) 13 15 0 4 2 0 4 2 B LS = LF – Activity time D G B D G 0 3 3 7 8 13 0 3 3 7 8 13 3 4 5 LF = EF 3 4 5 of Project© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 65 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 66 11
  • 12. 10/16/2010 LS/LF Times for LS/LF Times for Milwaukee Paper LF = Min(4, 10) Milwaukee Paper A C F A C F 0 2 2 4 4 7 0 2 2 4 4 7 2 4 10 13 0 2 2 4 10 13 2 2 3 2 2 3 Start E H Start E H 0 0 4 8 13 15 0 0 4 8 13 15 4 8 13 15 0 0 4 8 13 15 0 4 2 0 4 2 B D G B D G 0 3 3 7 8 13 0 3 3 7 8 13 8 13 1 4 4 8 8 13 3 4 5 3 4 5© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 67 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 68 Computing Slack Time Computing Slack Time After computing the ES, EF, LS, and LF times Earliest Earliest Start Finish Latest Start Latest Finish Slack On Critical for all activities, compute the slack or free Activity ES EF LS LF LS – ES Path time for each activity A 0 2 0 2 0 Yes B 0 3 1 4 1 No Slack is the length of time an activity can C 2 4 2 4 0 Yes be delayed without delaying the entire D 3 7 4 8 1 No project E 4 8 4 8 0 Yes F 4 7 10 13 6 No Slack = LS – ES or Slack = LF – EF G 8 13 8 13 0 Yes H 13 15 13 15 0 Yes Table 3.3© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 69 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 70 Critical Path for ES – EF Gantt Chart Milwaukee Paper for Milwaukee Paper 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 A C F 0 2 2 4 4 7 A Build internal components 0 2 2 4 10 13 2 2 3 B Modify roof and floor C Construct collection Start E H stack 0 0 4 8 13 15 D Pour concrete and 13 15 install frame 0 0 4 8 0 4 2 E Build high- temperature burner B D G F Install pollution 0 3 3 7 8 13 control system 1 4 4 8 8 13 G Install air pollution 3 4 5 device H Inspect and test© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 71 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 72 12
  • 13. 10/16/2010 LS – LF Gantt Chart Variability in Activity Times for Milwaukee Paper 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 CPM assumes we know a fixed time A Build internal components estimate for each activity and there B Modify roof and floor C Construct collection is no variability in activity times stack D Pour concrete and PERT uses a probability distribution install frame E Build high- for activity times to allow for temperature burner variability F Install pollution control system G Install air pollution device H Inspect and test© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 73 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 74 Variability in Activity Times Variability in Activity Times Estimate follows beta distribution Three time estimates are required Expected time: Optimistic time (a) – if everything t = (a + 4m + b)/6 g goes according to plan g p Variance of times: V i f ti Pessimistic time (b) – assuming very unfavorable conditions v = [(b – a)/6]2 Most likely time (m) – most realistic estimate© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 75 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 76 Variability in Activity Times Computing Variance Most Expected Estimate follows beta distribution Optimistic Likely Pessimistic Time Variance Activity a m b t = (a + 4m + b)/6 [(b – a)/6]2 Expected time: Figure 3.12 A 1 2 3 2 .11 t = (a + 4m + b)/6 B 2 3 4 3 .11 Variance of ti V i Probabilityfoftimes: 1 in 100 of Probability C 1 2 3 2 .11 Probability < a occurring v = [(b − a)/6]2 of 1 in 100 of [(b D 2 4 6 4 .44 > b occurring E 1 4 7 4 1.00 F 1 2 9 3 1.78 Activity G 3 4 11 5 1.78 Time H 1 2 3 2 .11 Optimistic Most Likely Pessimistic Time (a) Time (m) Time (b) Table 3.4© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 77 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 78 13
  • 14. 10/16/2010 Probability of Project Probability of Project Completion Completion Project variance is computed by Project variance is computed by summing the variances of critical summing the variances of critical activities Project variance activities σ2 = .11 + .11 + 1.00 + 1.78 + .11 = 3 11 11 11 1 00 1 78 11 3.11 σp = Project variance 2 p = ∑(variances of activities on critical path) Project standard deviation σp = Project variance = 3.11 = 1.76 weeks© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 79 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 80 Probability of Project Probability of Project Completion Completion PERT makes two more assumptions: Standard deviation = 1.76 weeks Total project completion times follow a normal probability distribution Activity times are statistically independent 15 Weeks (Expected Completion Time) Figure 3.13© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 81 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 82 Probability of Project Probability of Project Completion Completion From Appendix I What is the probability this project can What is the probability this project can .00 .01 .07 .08 be completed on or before the 16 week be completed on or before the 16 week .1 .50000 .50399 .52790 .53188 deadline? deadline? .53983 .54380 .2 .56749 .57142 Z = due – expected date /σp .5 = due − expected date /σp Z.69146 .69497 .71566 .71904 date of completion date of completion .6 .72575 .72907 .74857 .75175 = (16 wks – 15 wks)/1.76 = (16 wks − 15 wks)/1.76 = 0.57 Where Z is the number of = 0.57 Where Z is the number of standard deviations the due standard deviations the due date or target date lies from date or target date lies from the mean or expected date the mean or expected date© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 83 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 84 14
  • 15. 10/16/2010 Probability of Project Determining Project Completion Completion Time 0.57 Standard deviations Probability Probability (T ≤ 16 weeks) of 0.99 is 71.57% Probability of 0.01 15 16 Time 2.33 Standard Z Weeks Weeks From Appendix I deviations 0 2.33 Figure 3.14 Figure 3.15© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 85 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 86 Variability of Completion What Project Management Time for Noncritical Paths Has Provided So Far 1. The project’s expected completion time Variability of times for activities on is 15 weeks noncritical paths must be 2. There is a 71.57% chance the equipment considered when finding the will be in place by the 16 week deadline probability of finishing in a 3. Five activities (A, C, E, G, and H) are on specified time the critical path Variation in noncritical activity 4. Three activities (B, D, F) are not on the may cause change in critical path critical path and have slack time 5. A detailed schedule is available© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 87 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 88 Trade- Trade-Offs and Project Factors to Consider When Crashing Crashing a Project It is not uncommon to face the following situations: The amount by which an activity is crashed is, in fact, permissible The project is behind schedule Taken together, the shortened The completion time has been activity durations will enable us to moved forward finish the project by the due date Shortening the duration of the The total cost of crashing is as project is called project crashing small as possible© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 89 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 90 15
  • 16. 10/16/2010 Steps in Project Crashing Steps in Project Crashing 3. If there is only one critical path, then 1. Compute the crash cost per time period. select the activity on this critical path If crash costs are linear over time: that (a) can still be crashed, and (b) has the smallest crash cost per period. If Crash cost (Crash cost – Normal cost) there is more than one critical path, then per period = select one activity from each critical path (Normal time – Crash time) such that (a) each selected activity can still be crashed, and (b) the total crash 2. Using current activity times, find the cost of all selected activities is the critical path and identify the critical smallest. Note that the same activity may activities be common to more than one critical path.© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 91 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 92 Steps in Project Crashing Crashing The Project Time (Wks) Cost ($) 4. Update all activity times. If the desired Crash Cost Critical Activity Normal Crash Normal Crash Per Wk ($) Path? due date has been reached, stop. If not, return to Step 2. A 2 1 22,000 22,750 750 Yes B 3 1 30,000 34,000 2,000 No C 2 1 26,000 27,000 1,000 Yes D 4 2 48,000 49,000 1,000 No E 4 2 56,000 58,000 1,000 Yes F 3 2 30,000 30,500 500 No G 5 2 80,000 84,500 1,500 Yes H 2 1 16,000 19,000 3,000 Yes Table 3.5© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 93 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 94 Crash and Normal Times Critical Path and Slack Times and Costs for Activity B for Milwaukee Paper Activity Cost Crash A C F 0 2 2 4 4 7 $34,000 — Crash Cost – Normal Cost Crash Cost/Wk = Normal Time – Crash Time 0 2 2 4 10 13 2 2 3 Crash $33,000 — $34,000 – $30,000 Cost C t = 3–1 Start Slack = 0 Slack = 0 E Slack = 6 H $32,000 — 0 0 $4,000 4 8 13 15 = = $2,000/Wk $31,000 — 2 Wks 13 15 0 0 4 8 0 4 2 $30,000 — Normal B D Slack = 0 G Slack = 0 — 0 3 3 7 8 13 Normal Cost 1 4 4 8 8 13 | | | 3 4 5 1 2 3 Time (Weeks) Figure 3.16 Crash Time Normal Time Slack = 1 Slack = 1 Slack = 0 Figure 3.17© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 95 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 96 16
  • 17. 10/16/2010 Advantages of PERT/CPM Advantages of PERT/CPM 1. Especially useful when scheduling and 5. Project documentation and graphics controlling large projects point out who is responsible for various 2. Straightforward concept and not activities mathematically complex 6. Applicable to a wide variety of projects pp y p j 3. Graphical networks help highlight 7. Useful in monitoring not only schedules relationships among project activities but costs as well 4. Critical path and slack time analyses help pinpoint activities that need to be closely watched© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 97 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 98 Limitations of PERT/CPM Project Management Software 1. Project activities have to be clearly defined, independent, and stable in their There are several popular packages relationships for managing projects 2. Precedence relationships must be Primavera specified and networked together MacProject M P j t 3. Time estimates tend to be subjective and Pertmaster are subject to fudging by managers VisiSchedule 4. There is an inherent danger of too much Time Line emphasis being placed on the longest, or Microsoft Project critical, path© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 99 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 100 Using Microsoft Project Using Microsoft Project Program 3.1 Program 3.2© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 101 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 102 17
  • 18. 10/16/2010 Using Microsoft Project All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Program 3.3© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 103 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 104 18